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What is Florida Trustee Discretion?

FAQs • Mar 27, 2021
post about What is Florida Trustee Discretion?

Billions of dollars are in Florida trusts. And most trustees have the discretion to give beneficiaries money — or not ! What is Florida Trustee Discretion? We have previously provided commentary on Florida Trustee Breach of Fiduciary Duty. Now let’s consider the power of a trustee to exercise its discretion to give you trust money.

Florida Trustee Discretion. A trustee who has distributed too much money to a beneficiary may have to give it back. That trustee may be subject to a court-filed trustee surcharge action.

Florida Trust Code

Chapter 736 of the Florida Statutes is the Florida Trust Code. It tells you all about the law of trusts in Florida. This law also speaks about a trustee’s discretion. “There are two important things for any beneficiary to read” says trust litigator John Pankauski, author of Pankauski’s Trustee’s Guide– 10 Steps to Family Trustee Excellence. “One is the trust document itself. The other is the Trust Code.” Specifically, Pankauski says to read Florida Trust Law 736.0814. This trust law talks about a trustee’s discretionary powers. Pankauski knows a thing or two about trust lawsuits. His firm of expert litigators and appellate lawyers restrict their practice to litigation and appeals of trusts and estates. “A lot of out of state trust beneficiaries need assistance reading the trust document” says Pankauski. “And understand whether their Florida Trustee acted properly.” We have previously provided commentary about SUSPENDING your trustee vs. REMOVING your trustee. Now, let’s focus on Florida Trustee Discretion.

Appealing Trustee Discretion

What are the rules if you don’t like a trustee’s decision? Let’s say that the trust document says the trustee may distribute money to you for health, education, maintenance and support. Or, for any reason. But the trust document also lets the trustee give trust funds to OTHER beneficiaries besides you. What if your Florida Trustee is not giving you your money from your trust? What can you do? You can ask again, nicely. If you are in court, you can also ask the trial judge to review the trustee’s conduct. How do you know if the Florida Trustee Discretion was proper? The trustee cannot, repeat, CANNOT, exercise its discretion in an arbitrary or capricious manner. You can read more about that trust law in the case of NCNB v. Shanaberger. That was a trust case from Florida’s 2nd District Court of Appeal in 1993. 616 So. 2d 96. If a trial judge makes a ruling on the trustee’s conduct, what are the rules if you take a trust appeal? Well, the role of the appeals court is not to second guess the trial judge in the Probate Court. After all, that probate judge is in the best position to weigh the evidence, and the credibility of the witnesses at your trust trial. The appeals court will consider whether the Probate Judge made rulings based on COMPETENT SUBSTANTIAL EVIDENCE. You know, documentary evidence, testimony, etc. The Florida Appeals Court will also consider whether the Probate Court applied the correct law.

Powers of Invasion

A special problem for trust beneficiaries can arise if there is an unlimited power of invasion. You know, the kind of language which gives great and broad discretion to a trustee. What kind of power? The power to give out a lot of trust money to one particular beneficiary. You see this a lot in so called marital trusts. Especially when there is a second spouse who is the lifetime beneficiary. And that spouse is NOT the parent of the beneficiaries who inherit after that spouse dies. But Florida Trust Law is clear. A trustee cannot make money distributions in an arbitrary manner. A trustee has a Duty of Impartiality to all trust beneficiaries. Even those trust beneficiaries who are so called “remainder beneficiaries” or “remaindermen” beneficiaries. Today, under the Florida Trust Code, we refer to those who take years later as “qualified beneficiaries.” This is because even when a trustee has an unlimited power to invade the trust for one beneficiary, it still must be loyal, impartial and prudent. The trustee also has a duty of GOOD FAITH. The trustee cannot haphazardly give out money. A trustee still has a duty to those other trust beneficiaries, so called remainder beneficiaries.